Gold heads for weekly loss on rate-hike fears

June 12, 2026 (MLN): Gold prices extended losses on Friday and remained on course for a sharp weekly decline as investors weighed persistent inflation concerns and the possibility of further U.S. interest rate increases, reducing the appeal of the precious metal.

Currently, spot gold is slightly up 2.41% to $4,190.41 an ounce as of [09:49 am] PST, according to data reported by Mettis Global.

The precious metal had touched its lowest level in more than six months on Thursday before recovering some ground after U.S.

President Donald Trump declared that planned military action against Iran had been abandoned and suggested that a peace agreement between Washington and Tehran could be finalized soon, as CNBC reported.

The gold prices are currently being driven largely by developments surrounding the Middle East conflict. However, expectations regarding U.S. monetary policy remain a key factor influencing investor sentiment.

Gold has shed nearly 20% since the outbreak of the Iran conflict, as concerns over higher energy prices have fueled inflation expectations.

Elevated inflation could encourage major central banks, particularly the U.S. Federal Reserve, to maintain tighter monetary policy for longer, increasing the opportunity cost of holding non-yielding assets such as gold.

Adding to those concerns, recent U.S. economic data showed producer prices rose more than anticipated in May, recording the strongest annual increase in three-and-a-half years.

The rise was attributed in part to higher energy costs linked to tensions in the Middle East.

According to market pricing, traders are increasingly anticipating the possibility of another U.S. rate increase later this year, with December emerging as the most likely window for a policy move.

On the geopolitical front, Trump stated that the United States and Iran could reach a peace agreement as early as this weekend, potentially paving the way for the reopening of the Strait of Hormuz, a critical global energy shipping route.

Iranian officials, however, indicated that no final decision had yet been made regarding such an agreement.

Meanwhile, investor interest in gold-backed funds weakened, with holdings of the world's largest gold-backed exchange-traded fund, SPDR Gold Trust, declining by about 0.3% to 923.89 metric tons.

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